The lower house of Parliament on Wednesday backed draft legislation
introducing a third rate of the value added tax. If approved, the proposal,
put forth by the government, would establish a 10-percent rate that would
apply to books, medicine and baby food, as of January 2015. The Czech
Republic currently has two VAT rates, 21 and 15 percent, respectively. The
government believes a third, 10-percent rate would lower the prices of the
selected goods, benefiting mainly families with children. Opposition
leaders criticized the plan as hypocritical, and instead suggested the
existing VAT rates should be lowered. A final vote on the proposal in the
lower house is scheduled for later this week.

The price of cigarettes in the Czech Republic is due to rise by up to four
crowns for a pack of 20. Wednesday’s approval of the price hike in the
lower house followed a fall in the value of the crown that left the Czech
Republic in contravention of a new EU guideline on excise duty. More

A cut in Value Added Tax to 10 percent for books, baby food, and drugs was
approved by the government on Wednesday at its regular weekly meeting. The
reduce rate of sales tax should come into force from the start of 2015.
Babies’ nappies did not make it into the basket of tax reduced items
because of fears that a reduction here would conflict with European rules.
The introduction of a reduced rate of tax is one of the government’s
flagship measures. The Cabinet also agreed to abolish charges for visits to
doctors and hospitals with the exception of use of emergency services.

Former national police chief Petr Lessy is demanding compensation of CZK
1.2 million and a formal apology from the state for being prosecuted in
2012. He was removed as police president by the then minister of the
interior after being charged with slander and abuse of office before a
court threw out the prosecution last year. Mr. Lessy told Czech Radio on
Saturday that the amount he was demanding corresponded to his legal fees
and lost income.

The Finance Ministry has proposed introducing three VAT rates as of 2015,
the ctk news agency reports citing ministry sources. This would include the
current standard VAT at 21 percent, a reduced 15 percent VAT rate and a
lower rate of 10 percent for selected products such as medicines, books and
baby food. Contrary to expectations, the Finance Ministry has not included
nappies in the lowest rate, on the argument that this is in violation of EU
norms and Prague would be unlikely to get an exemption. The proposed draft
bill also envisages a series of measures to fight tax evasion.

Almost 17,900 new book titles were published in the Czech Republic in 2013,
an increase of around 600 on the previous year, the Czech News Agency
reported on Thursday. The figures coincide with the opening of the Czech
Republic’s flagship annual book fair, Book World, in Prague on Thursday.
New titles peaked in the Czech Republic in 2011 with almost 19,000 being
published. Since then the sector has been hit by the imposition of a higher
rate of Value Added Tax rate on books and increased costs. The current
centre-left coalition government has promised to put books back into a
lower VAT band.

More than 300 Czech bookshops were on Wednesday offering 15 percent
reductions on their prices as part of a campaign to cut Value Added Tax on
books. The Association of Czech Book Sellers and Publishers has welcomed
the government’s proposal to cut the current 15 percent VAT rate on books
to 10 percent but says that it still believes that the right rate should be
5 percent. The association says a 10 percent rate would still leave the
Czech sales tax on books higher than in most other European countries.

The Czech coalition parties have approved plans to cut the VAT rate on
drugs, medicine, diapers and food for infants from 15 to 10 percent as of
2015. Prime Minister Bohuslav Sobotka said the Finance Ministry would now
incorporate the move into the draft of next year’s state budget; it is
estimated that the lower VAT rate would cost the budget several billion
crowns. The Czech government is yet to discuss the plan with the European
Commission; it will consider plans for further cuts of the VAT rate only
after measures to improve VAT collection are implemented, according to the
prime minister.

The Czech Finance Ministry’s plans to cut the two existing VAT rates by
one percent to 20 and 14 percent, respectively, in 2016 have not been
approved by the coalition parties and would have an disproportionate impact
on the state budget, Prime Minister Bohuslav Sobotka has said. Mr
Sobotka’s remarks came in a reaction to the daily Mladá fronta Dnes’
report on Wednesday detailing the plans. The Finance Ministry would also
like to introduce a third, 10-percent VAT rate next year that would apply
to drugs, books, and baby food; the prime minister said this was a
reasonable compromise.

Czech consumers can look forward to having more change in their pockets
after shopping trips if reported plans for the phase in of three levels of
Value Added Tax come true. A preliminary document outlining the changes has
already been drawn up by the finance ministry but still needs to be
approved by the government by the end of the month. More